Office of the Chief Procurement Officer Progress New...
Transcript of Office of the Chief Procurement Officer Progress New...
Office of the Chief Procurement Officer
Progress
&
New Projects
Office of the Chief Procurement Officer: 11 May 2016
1
Status of OCPO
• Office established in March 2013,
– 2015 SCM Review released: diagnostic of public procurement and
provides a reform roadmap
• OCPO corporate structure:
– Policy & Legal
– Governance, Monitoring & Compliance,
– Transversal Contracts,
– Strategic Sourcing,
– SCM ICT, and
– SCM Stakeholders &Clients Management
• Office is fully established
– Supported by technical expertise
– SCM is a specialised field
2
Achievements: Stakeholder management
• The launch of the CSD and other systems on 1 September 2015,
kick-started the road shows to all nine (9) provinces
• Training was provided on the CSD/eTenders for users
• Engagements on other forthcoming reforms were shared
• A 3-month radio (9 African Languages & 2 Commercial) Newspaper
& Billboards campaign was run for the CSD registration and access
to eTenders
• The latest workshops with SCM practitioners occurred every
Thursday for the last 4 weeks
• Engagements with Civil Society Organisations on how they can
improve/assist government on oversight – further Training will be
provided.
3
Achievements: Automation
• Central supplier database
– Central portal for registration of prospective government suppliers
– Benefits
• Once off supplier registration
• Reduction of administrative cost/compliance burden
• Standardised and electronic verification of supplier information
– Tax (SARS)
– Business registration (CIPC)
– Bank accounts
– Identity (DHA)
– Tender defaulters,
– State employees, etc.
– 68 000 registered suppliers and counting
4
Achievements: Automation
5
• eTender Portal
– A web based platform for organs of state to
– advertise bids, publish bid notice, amendments or erratums
– cancellation and awards
– Benefits
• Free access to tender documents
• Transparency
– Advertisements linked to Demand plan
– Tender awards, cancellations and amendments
• Cost saving – advertisements
• 2758 tenders published thus far
Achievements: Automation
6
• gCommerce
– Online shopping tool that makes it easier for procurement officials
to purchase from transversal contracts, eg. Amazon.com for
government.
– How does it change the way of doing business-benefits
– Benefits
• Web based accessible anywhere
• Reduced administrative burden
• No more calling and placing manual orders
• Ability to view products, prices and stock before placing orders
• Faster turnaround times
• Caps over expenditure-Integration capability with financial
systems
• Accurate identification of commodities/items – using UNSPSC
Achievements: Automation
7
• eProcurement for government
– An integrated procurement system that enables end to end
procurement process management
– Benefits
• Demand management(procurement plans, spend analysis, etc)
• Sourcing
• Purchasing
• Supplier management
Achievements: Governance monitoring and
compliance
• Reviewing contracts above R10 million
– Coal contracts – Eskom
– Consulting Contracts – Transnet
– Implementing remedial actions of Public Protector: PRASA
• Published on the OCPO website on a quarterly basis.
• Institutions to submit quarterly reports to provincial legislature and
Parliament for oversight purposes.
• Oversight committees to assess if institutions comply with procurement
plans to speed up service delivery.
8
Achievements: Transversal contracting
• Spend under central management of R26 Billion excluding voluntary
participation by Municipalities and SOE’s. Currently, the National Treasury
manages 40 transversal contracts for the purchase of goods such as vehicles,
medical consumables and devices, textiles, etc.
• Introduction of 4 new commodity spend streams
– Property and Leasing
– Professional Services
– Education
– ICT
• Learner teacher support materials
– Savings – reduction in price of stationery packs to R110 per learner. LTSM
Savings projected at R1 Billion if all provinces participate in the contract.
• School furniture tender
• Norms and standards in school construction
– R35 million per school
9
Current Reforms Transversal Contracting :
– From 1 April 2016, the participation of government on the existing (40)
and new transversal contracts is mandatory. This means all common
goods purchased by government will be procured collectively with better
buying power.
– 15 more contracts will be negotiated and managed centrally which will
focus on the health, education property, ICT, support services sectors
– Identification, co-ordination and increase in provincially managed
contracts
– Increased participation of municipalities and SOE’s in centrally negotiated
contracts
– Increased contracting with local, black and small businesses
– Online bidding process for all advertised Transversal Contracts as well as
online catalogue for ease of use by buyers and end users
10
Achievements: Strategic Procurement
– Strategic procurement framework drafted and circulated. This will provide
guidance on how to apply differentiated procurement methods for the
various procurements e.g.. infrastructure vs stationery
– Data Analysis conducted on 2012-2014 spend for National and Provincial
Departments, 8 Metros and 12 Public Entities to determine high spend
cross cutting commodities
– Travel and Accommodation
• Direct negotiations with full service carriers – SAA and BA – between
25-30% upfront discount achieved
• Direct negotiation with 4 major hotel groups – maximum allowable rate
per star grading set
• National travel policy developed to create uniformity in travel
management effective 1 July 2016
– Standards for infrastructure procurement and delivery system developed
and issued
– School cost model developed and issued
11
Current Reforms Strategic Procurement:
– SPF to be issued as Treasury instruction note during the 2016/17 financial year
– Communications – Savings of approx. R300 to R600 Million
• Mobile communications tender issued for National and Provincial requirements and closed
April 2016. Evaluation underway.
• Fixed Line request for proposal currently being drafted
– Further travel and accommodation commodities for negotiation include car rentals, shuttle
services, conferencing, bus and coach hire
– Medical equipment tender closed April 2016 – serves to standardise equipment utilised by
hospitals and clinics – includes high value and volume items which is estimated at approx. R2
Billion
– New projects includes the following projects:
• LTSM procurement and distribution model
• Medical equipment continuation
• Medical Waste Management
• Hospital laundry and linen
• Pharmaceutical dispensing model
• Hospital food services and cleaning services
• Infrastructure and related professional services
– Co-ordination and increase in sector and department strategic sourcing opportunities eg. ICT
12
Plans for compliance and reporting
• Institutions should expected to submit the following to Legislatures and
Parliament for oversight:
– Reports on the adherence to procurement plans,
– Number of deviations from Procurement Plans,
– Number of condonations approved by Accounting Authorities
contravening the PFMA and SCM Prescripts,
– Reports on the outcome of investigations,
– Implementation progress on the remedial actions resulting from
investigations,
– Lack of analysis in what is being bought against the budget,
– How is the procurement done on commodities/services not reflected
on the procurement plan?
13
Plan for savings of R75 Billion by year 3 of MTEF
• OCPO strategy to savings are focused on five areas:
– Renegotiate existing contracts of top 100 suppliers;
– Consolidate spent on common goods where economies of scale in
provide opportunities for government to use its bulk purchasing power
(transversal contracts);
– Utilise technology smarter to reduce duplication of effort and cost;
– Optimisation and innovation – cost avoidance, cost reduction, cost
effectiveness;
– Reduction of Red Tape
• Efforts by OCPO will result in R75 billion over the 2016 - 2018 MTEF with
savings of R15 billion, R25 billion and R35 billion from 2016/17, 2017/18
and 2018/19 financial years respectively
14
Plan for savings of R75 Billion by year 3 of MTEF
• Identify Top 100 suppliers
– TELKOM - Basil Read - Aspen Health - Vodacom
– Travel with Flair - AG Solutions - MTN - BioVac
– Group 5 - Eduvision - MicroSoft - IBM
• Focus on sectors - Negotiation strategy is to focus on industry specific
contracts and focus currently is on:
– Construction - Pharmaceuticals - Banking
– ICT - Travel - Education
– Leasing - Telecommunications - Professional services
• Targets based on feasibility
– Construction R5 billion in 2016 - Travel R1 billion in 2016
– Leasing R3 billion in 2016 - ICT R1.5 billion in 2016
– Telecomms R1.5 Billion - Education R1 billion in 2016
– Sundry negotiations R2 billion in 2016
15
Plan for savings of R75 Billion by year 3 of MTEF
• Transversal contracts
– Expand the number of contracts from 40 to 90 and increase
aggregated spent from R26 bil to R90 bil – it reduces unit cost for
common goods
– Renegotiate existing contracts - Eliminate off contract spent from
transversal contracts
• Technology utilisation
– Save R700 mil per year by publishing on www.etenders.gov.za
– Save R350 mil per year by eliminating duplication of verification
services and supplier registration service providers
– Operational costs will be reduced by R1.5 billion (eliminating storage
of paper, data capturing, excessive staff
– Reducing transaction costs – currently it costs
16
Plan for savings of R75 Billion by year 3 of MTEF
• Optimisation
– At procurement process, insist on norms and standards e.g
Computers are categorised in entry models for PAs, and high end
PCs for officials requiring high processing capacity;
– Use office space better – average office size for government
officials are 36m compared to 18 – 20 m in private sector
– One printer available on a network for 8 – 15 staff members in stead
of a printer per person
– Total cost of ownership – a little bit more expensive but lasts 2 or 3
times longer (Eg building schools to last a hundred years instead of
high maintenance costs after 10 years)
– Avoiding unnecessary purchases, making full use of assets and
resources is estimated in cost avoidance of R20 bil a year
17
Plan for savings of R75 Billion by year 3 of MTEF
• Reducing Red Tape
– Automate labour intensive processes such as manual quotation
processes – it costs government R3600 to raise an purchase order at
the moment;
– Simplify procurement processes – consolidating SDBs, reducing
tender evaluation and award timelines etc.
– Dispute resolution to be accelerated – to many delays, claims and
legal costs on contested awards and poor quality services
– Automated procurement from gCommerce of standard commodities
– Specialisation in high value items – team of professionals that drive
high value strategic procurements
18
Current Work: Policy, norms and standards
• Treasury Regulations
– Rationalising instruction notes and circulars
– Differentiate between goods and service and infrastructure
procurement
• Empowerment
– Looking at a different regime for empowerment
• Public Procurement Bill
– Fully establishing the OCPO
– Roles and responsibilities of different role players within an entity
– Empowerment
– Reporting and transparency
– Abuse of the system
– Dispute resolution
– Role of CSOs
– etc
19
Challenges with current reforms
• Support required from National Departments, Provinces and Entities on:
– Implementation of systems
– Submission of required documents for review: slow and non-
compliance
– Poor communication within departments, provinces and entities on
the reforms
– Difficulty in finding fitting skills for the OCPO
– Slow mind-shift of the changes within SCM environment
– No consequence for non-compliance and corruption
• Transgressors not punished
• Failure of integrated justice system
• No action taken against suppliers
• Non-payment of suppliers within 30-days – affects service delivery
and upcoming businesses.
20
How do these affect oversight work?
• It should be established in engagements with the Committees where the
SCM function lies in each department, why??
• The Committee should request more information on following areas not
clear in the Procurement Plans?
– If the AO/AA know what they are buying in the department/entity?
– If the AO/AA plans the procurement already signed off in the
procurement plans and the number of cancellation/deviations?
– Does the CFO of the department/entity know the cost drivers of their
budget?
– Are the existing contracts managed for performance and the
defaulters reported or not?
– What are the empowerment goals of each department, these should
be declared in advance?
21